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\par
\par
\par }\pard\plain \ltrpar\s23\qc \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \b\caps\f36\fs36\lang3081\langfe255\kerning1\cgrid\langnp3081\langfenp255 {\rtlch\fcs1
\af0 \ltrch\fcs0 \insrsid8680817 PART 1
\par RESPONSES TO QUESTIONS IN THE RETIREMENT INCOME CONSULTATION PAPER OF December 2008
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817
\par
\par
\par
\par }\pard\plain \ltrpar\s24\qc \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817 SUBMISSION BY: LLOYD FAIRHALL
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817
\par
\par }\pard\plain \ltrpar\s24\qc \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817 27 FEBRUARY 2009
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817
\par
\par
\par
\par
\par
\par
\par {\listtext\tab}}\pard\plain \ltrpar\s1\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\outlinelevel0\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs30\ul\lang3081\langfe255\kerning1\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 \page Summary
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817
\par The }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\insrsid8680817\charrsid8680817 key objective}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817
of policy should be that every person who is of sound mind and body should be able to retire with sufficient financial resources to not require any payments from the state for the remainder of their lives}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid14240240 .
}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid5255169 Considerations of inter-generational equity}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid14240240 may require a phase-in period of 10 to 20 years}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid5255169
for achieving sufficient saving for this objective}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 and }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid5255169 it }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid14240240 should be adopted }{\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817 without }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid5255169 continuing}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid14240240 the current }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 massive }{
\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid14240240 level of }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 financial incentives to people during their working lives.
\par
\par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid15736707 T}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 his }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid15736707 c}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 ould }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid15736707
be achieved with }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 a \'93Future Fund Mark 2\'94
backing a government defined benefit fund to provide a taxable, universal retirement income scheme that provided a little more than the current aged pension in real terms. This would be a more transparent approach to providing aged pensions.
\par
\par The current tax regime for superannuation }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8588398 may }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 be}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8588398 come}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 }{\rtlch\fcs1
\af0 \ltrch\fcs0 \insrsid15736707 politically }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8588398 un}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 sustainable as knowledge of its }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid7292278 tax advantages for}{\rtlch\fcs1
\af0 \ltrch\fcs0 \insrsid10360768 the wealthy}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 become}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8588398 s}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 more widespread in the population}{\rtlch\fcs1 \af0
\ltrch\fcs0 \insrsid8588398 , resulting in demands }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 by younger voters that governments }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8588398 change }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817
the regressive nature of }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid10360768 a}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 system }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid10360768 that }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817
puts additional taxation pressure on them. The ageing of the population will contribute to this taxation pressure.
\par
\par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid5255169 Achieving t}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 he revenue }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid5255169 for a funded universal pension scheme }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817
could be contributed by removal of the S}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid15736707 enior }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 A}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid15736707 ustralians }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 T}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid15736707 ax }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 O}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid15736707 ffset}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817
and modification of the superannuation taxation regime as detailed in the attached document.
\par
\par Perhaps \'93myopia\'94 in relation to saving for retirement should be further investigated}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid11941826 to determine the nature of the problem including details such as its variation between age cohorts}{\rtlch\fcs1
\af0 \ltrch\fcs0 \insrsid8680817 .}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid12869282 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817
Overall, perhaps governments should have more faith in the ability of their citizens to plan for retirement, particularly when they get into their 40s and 50s. If the commitment of governments
to fund retirement does not extend much beyond the age pension then there appears to be no reason for concern by governments about the needs of their citizens beyond that. Each citizen should be equipped with sufficient education and information but }{
\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6577285 the vast majority are}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 in a better position than governments to determine }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6577285 their}{\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817 particular circumstances, such as the probability of significant inheritance, which was not mentioned in the Consultation Paper.
\par
\par {\listtext\tab}}\pard\plain \ltrpar\s1\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid729190 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs30\ul\lang3081\langfe255\kerning1\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 \page Responses to Consultation Questions
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817
\par The following are responses to the questions posed in the \'93Retirement Income Consultation Paper\'94, December 2008. The numbering}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid15354492 in the sub-headings}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817
corresponds to that document.
\par
\par {\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 Q1.1: Objectives
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817
\par The }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\insrsid8680817 key}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\insrsid8680817 objective}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817
of policy should be that over a phase in period of 10 to
20 years, every person who is of sound mind and body should be able to retire with sufficient financial resources to not require any payments from the state for the remainder of their lives, and without directing massive financial incentives to people dur
ing their working lives to achieve this objective.
\par
\par This objective obviously raises issues of intergenerational equity and hence a phase}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid15354492 -in}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid15354492 of increased saving is }
{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 necessary and may need to be }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid15354492 10 \endash 20 years}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 . However, a}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid15354492
n early}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 start needs to be made on this o
bjective because there is no reason that I can see why most people cannot save for their own retirement. The current age pension system was introduced early last century when average living standards were much lower and seems an unnecessary impost on youn
ger taxpayers today. If need be, the personal taxation system should be made more progressive to achieve the objective.
\par
\par Only 2 pillars are therefore necessary. The compulsory pillar should be increased substantially via the tax system ie increasing taxes a
nd lowering expenditure to direct more into the superannuation system, or a replacement for it, with targeting towards those most at risk of falling below the level of savings required to fund their retirement. One source of revenue to achieve this is by
eliminating the huge tax expenditures aimed at encouraging mostly wealthy citizens to contribute to superannuation}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid3683347 and other retirement incentives for people already wealthy}{\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817 . Voluntary saving}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid3683347 on top of the equivalent of the aged pension should attract}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 minimal financial }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid3683347
incentives and}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 only to a certain level }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid3683347 of saving}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 .
\par
\par This objective will require a highly financially literate population, so the education system should be modified to ensure this from a very early age for each child. For those who regard their
knowledge or abilities as inadequate for the task of managing their life savings, or perhaps the population in general, the Australian Government should establish a default scheme managed by the Government, similar to the Future Fund. This should be a de
fined benefit scheme that aims to provide an equivalent of the old age pension at retirement for each person plus}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid16592978 say}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817
10 or 20%. Administration of this scheme, determination of contribution rates and investment management would be outsourced to the private
sector, with the Government determining objectives, as per the Future Fund. Contributions would be paid directly from the Australian Tax Office to th}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid16592978 is}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817
Future Fund Mark 2. This could in fact be extended to the whole population and would result in a much more transparent system for funding the old age pension than at present. (The reason for a government}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid16592978
-owned rather than privately-owned}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 defined benefit scheme is to minimise mortality risk by pooling }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid16592978 across the whole population }{\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817 and because the government is well placed compared to the private sector to provide such }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid16592978 universal }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 benefits.)
\par
\par There will be some people, as identified in the Consultation Paper, who will be unable to achieve sufficient contributions to achieve an equivalent of the aged pension, and go
vernment support will be necessary for these people. Perhaps there should be a continuation of welfare schemes for those genuinely unable to obtain employment (such as people mentally and physically disabled) throughout their }{\rtlch\fcs1 \af0
\ltrch\fcs0 \insrsid9440785 life that is}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 distinct from the
aged pension. The aged pension for those who fail to save or dissipate their savings rapidly after retirement should be set at a lower level than the lifetime disability pensions.
\par
\par The aged pension should continue to be taxable (added to any other taxable
income) but without the current seniors tax offsets ie they should be abolished. These offsets add complexity to the tax system and create very high effective marginal tax rates for some seniors. They also make it more difficult to achieve the key object
ive stated above by causing personal tax rates on younger people to be higher. In effect, these offsets work to make more people more dependent on the government in retirement.
\par
\par I agree that myopia may be a problem, but the Consultation Paper does not present evidence for it. How widespread is it in the population and does it largely }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid729190 disappears}{\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817 as people get to ages of 40s and 50s? The current superannuation system works against people overcoming myopia with age by stipulating fixed dollar upper limits on wh
at can be contributed. More importantly, should it be a role for government to ensure a certain level of income maintenance in retirement which is related to pre-retirement income}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8588398
and in excess of the aged pension}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 ? Personally I think not, but if a majority of the Australian people think it should be, then compared to the }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8588398 problems}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid15748254 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817
of the current superannuation system it would be better if the government created a greatly expanded Future Fund Mark 2 and used it to save on behalf of the whole population. Is no
t each individual the best judge of the amount of savings her/she requires for retirement, providing the government does its best to present the information that helps each individual to make a decision}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8588398 ?}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817
\par
\par {\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 Q2.1: Individuals excluded from the SG system
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817
\par Apart from those with disabilities, this is a matter for them \endash see above for accommodation of individuals partly or wholly excluded from the SG system.}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid610718 There is no prohibition on saving in
{\*\xmlopen\xmlns2{\factoidname place}}{\*\xmlopen\xmlns2{\factoidname country-region}}Australia{\*\xmlclose}{\*\xmlclose}.}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817
\par
\par {\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 Q2.2: Adequacy of the retirement income system
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817
\par The government should aim for a retirement income for every individual that is 10 \endash 20% above the current level of the aged pension in real terms \endash see above. The existing superannuation system is inadequate and inappropriate in}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid10104928 that it}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 s }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid10104928 incentives are not primarily aimed at }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 help}{\rtlch\fcs1
\af0 \ltrch\fcs0 \insrsid10104928 ing}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 those most likely to be wholly or partly dependent on the age pension.
\par
\par {\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 Q2.3: Role of government
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817
\par See above. The role of government should be to ensure that people receive an income in retirement that is around the current level of the ag
ed pension in real terms. Political considerations mean that governments cannot avoid providing such an income but this should be the extent of their involvement. This level of support should be funded by compulsion, not tax incentives to individuals. Bey
ond this, there should be no}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid159836 financial}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817
support from governments. They should instead concentrate on lower taxes and/or better services and provision of infrastructure. The government\rquote s role should not change as an individual\rquote s income increases over }{\rtlch\fcs1 \af0
\ltrch\fcs0 \insrsid159836 his or her}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 working life.
\par
\par {\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 Q3.1: Are the settings of the system adequate?
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817
\par As stated above, the }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid729190 compulsory}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 level of contributions should be set so as to achieve a retirement income for each individual }{\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid7629527 that}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 is just above the current aged pension in real terms. }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid7629527 A}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 ny i
ncreases in contributions required to achieve this objective should }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid7629527 come from }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817
the personal taxation system or government contributions, not via additional imposts on employers.
\par
\par {\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 Q3.2: The current superannuation concessions
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817
\par I do not have the facilities to
model the current superannuation tax system, but I doubt that the current tax regime for superannuation is sustainable. The answer to the sustainability question may not, however, lie in macro-economic modelling but in whether, as knowledge of the }{
\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid12219987 problems}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8588398 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 of the system become more widespread in the population, there a}{\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid12219987 re}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid12219987 demands }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 by younger voters that governments address the regressive nature of }{\rtlch\fcs1
\af0 \ltrch\fcs0 \insrsid12219987 a }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 system that puts additional taxation pressure on them. The ageing of the population will contribute to this taxation pressure. See the attached document.
\par
\par {\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 Q4.1: Ages of eligibility
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817
\par Eligibility for the age pension should be raised to 67 years, although this should only occur over a transition period. Choice of the age is a difficult decision, but if the above sugge
stions were adopted in relation to the Federal Government creating a universal defined benefit scheme to replace the pension, then the contributions }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid11209267 required for}{\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817 that }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid11209267 scheme }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 would be determined in relation to the age of eligibility. There would then be cer
tainty for each individual. The age of eligibility could be modified over time for various age cohorts. It }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid15748254 has been suggested}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817
that life expectancies could fall for some cohorts in the future}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid4135992 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid876019 (}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid4135992 due to obesity for example}{\rtlch\fcs1 \af0
\ltrch\fcs0 \insrsid876019 )}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 .
\par
\par {\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 Q4.2: Investment and longevity risk
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817
\par The government already provides a basic offset to investment and longevity risk in the form of the age pension and this could be extended as described above}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6572848 \endash slightly higher level and universal}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 . Individuals should take responsibility for managing these
aspects of their retirement savings. Again, the education system should be urgently reviewed to ensure that it addresses these matters at an early age by equipping young people with the skills to be able to take responsibility for their assets as they gr
ow older. Governments should not impinge excessively on the flexibility of individuals in managing their life savings.
\par
\par Financial markets generally provide the means to deal with these risks, although in most cases at an excessive price. There have been plenty of structured products and products with asymmetric risk profiles offered in {\*\xmlopen\xmlns2{\factoidname place
}}{\*\xmlopen\xmlns2{\factoidname country-region}}Australia{\*\xmlclose}{\*\xmlclose}, including products listed on the ASX. I see no role for governments to address shortcomings. For example, despite the massive falls in }{\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid729190 stock markets}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 over recent per
iods, workers who have been steadily saving for retirement over the last 15 to 20 years should have been able to achieve very good gains on their assets. (If further massive falls occur then this may not continue to be the case, such as the circumstances
o
f 1930s Depression style falls in equities of 90%. In such circumstances, it would be likely that there would be a question mark over the competence of governments in managing economies around the world. Even so, if the government is providing the age pen
sion as a fall back position then it has no further role to play, other than trying its best to re-start the economy. This is likely to include special payments to retirees to stimulate demand.)
\par
\par {\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 Q5.1: Undue complexity and cost
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817
\par This could easily be answere
d by a poll asking a sample basic questions about the superannuation system, which I expect would demonstrate very little understanding of it. For example, what proportion of the working population know that contributions can be concessional or non-conces
sional and that a 15% tax is applied in the fund on the former?
\par
\par It is imperative that tax and other aspects of the superannuation system be fixed soon, and it is particularly important that it be done by starting from \'93a clean sheet of paper\'94, ie what syst
em would be designed if the current system did not exist? Yet another patch}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6964103 -up }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 of the current system }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6964103
as opposed to fundamental reform }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 would add to complexity and further undermine public confidence in }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6964103 it}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 .
\par
\par See attached document on how to fix this complexity.
\par
\par {\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 Q6.1: Role for the age pension
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817
\par See above. If the above proposal for a government defined benefit scheme to fund the age pension was adopted then a taxable universal age pension without means test could be provided.
\par
\par {\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 Q6.2: Workforce participation
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817
\par Stip
ulating minimum pensions from superannuation funds is not conducive to continuing saving (and reducing longevity risk) or workforce participation. Tax-free superannuation pensions for those over 60 years of age implies that this should be the retirement a
ge for most people and will be an incentive for most people to retire then. (See attached document for a solution to these problems.)
\par
\par The current superannuation system and the range of financial advantages for older people (from near-zero public transport fares to pharmaceutical subsidies to the Seniors Australians Tax Offset) must result in }{\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid729190 higher }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 personal taxes for young people. Higher taxes on income may be a disincentive to work and save for some, particularly if they are aware of the regressive superannuation taxation system.
\par
\par {\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8680817 Q6.3: Effect of financial mediation on retirement incomes
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid8680817
\par If the government does not have a role in trying to ensure income maintenance relative to pre-retirement income beyond the age pension then this should not be an issue. T
his is provided that lenders are adequately supervised to ensure that some citizens do not take on excessive debts that they are never likely to be able to repay, such as has happened recently in the {\*\xmlopen\xmlns2{\factoidname place}}
{\*\xmlopen\xmlns2{\factoidname country-region}}USA{\*\xmlclose}{\*\xmlclose}.
\par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par
\par
\par
\par
\par }\pard\plain \ltrpar\s23\qc \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \b\caps\f36\fs36\lang3081\langfe255\kerning1\cgrid\langnp3081\langfenp255 {\rtlch\fcs1
\af0 \ltrch\fcs0 \insrsid13398692 SUBMISSION IN REGARD TO:
\par }\pard \ltrpar\s23\qc \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 THE RETIREMENT INCOME SYSTEM
\par }\pard \ltrpar\s23\qc \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 ({\*\xmlopen\xmlns2{\factoidname country-region}}{\*\xmlopen\xmlns2{\factoidname place}}
AUSTRALIA{\*\xmlclose}{\*\xmlclose}\rquote S FUTURE TAX SYSTEM REVIEW)
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par
\par }\pard\plain \ltrpar\s23\qc \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \b\caps\f36\fs36\lang3081\langfe255\kerning1\cgrid\langnp3081\langfenp255 {\rtlch\fcs1
\af0 \ltrch\fcs0 \insrsid13398692 PART 2
\par A RESPONSE TO QUESTION 3.2 AND OTHERS IN THE RETIREMENT INCOME CONSULTATION PAPER OF December 2008 \endash HOW SHOULD THE TAXATION OF SUPERANNUATION BE REFORMED?
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par
\par }\pard\plain \ltrpar\s24\qc \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692 SUBMISSION BY: LLOYD FAIRHALL
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par
\par }\pard\plain \ltrpar\s24\qc \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692 27 FEBRUARY 2009
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par }\pard\plain \ltrpar\s26\qj \li0\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 TOC \\o "1-3" \\h \\z \\u }}{\fldrslt {\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671763"}{\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0
\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700360033000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 Summary}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671763 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700360033000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 3}}}\sectd
\linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0 \f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s25\qj \li220\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin220\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671764"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700360034000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 For the Majority}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671764 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700360034000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 3}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671765"}{\rtlch\fcs1
\af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700360035000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802
More Wealthy Account Holders}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671765 \\h }{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700360035000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 4}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671766"}{\rtlch\fcs1
\af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700360036000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802
For the Federal Government}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671766 \\h }{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700360036000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 4}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s26\qj \li0\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671767"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700360037000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 Objectives}{\rtlch\fcs1
\af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671767 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700360037000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 5}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671768"}{\rtlch\fcs1
\af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700360038000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 A Summary of the Problems
}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671768 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700360038000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 5}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s25\qj \li220\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin220\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671769"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700360039000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 Inconsistency of Policy}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671769 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700360039000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 5}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671770"}{\rtlch\fcs1
\af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370030000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 Infexibility}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671770 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370030000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 7}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s27\qj \li440\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin440\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671771"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370031000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 For the Australian
Government}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671771 \\h }{\rtlch\fcs1 \af0
\ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370031000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 7}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671772"}{\rtlch\fcs1
\af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370032000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 For Individuals}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671772 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370032000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 7}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s25\qj \li220\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin220\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671773"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370033000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 Complexity}{\rtlch\fcs1
\af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671773 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370033000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 7}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671774"}{\rtlch\fcs1
\af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370034000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 Sustainability?}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671774 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370034000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 8}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s26\qj \li0\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671775"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370035000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 The Proposed Solution
\endash The LSS}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671775 \\h }{\rtlch\fcs1
\af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370035000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 8}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s25\qj \li220\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin220\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671776"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370036000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 Associated Changes}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671776 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370036000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 11}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s27\qj \li440\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin440\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671777"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370037000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 Possible G
overnment Contributions}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671777 \\h }{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370037000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 11}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671778"}{\rtlch\fcs1
\af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370038000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 CGT Changes}{\rtlch\fcs1
\af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671778 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370038000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 12}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671779"}{\rtlch\fcs1
\af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370039000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802
Other Taxation System Changes}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671779 \\h }{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700370039000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 12}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671780"}{\rtlch\fcs1
\af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380030000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802
Purposes of LSFs and Death of Account Holders}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692
PAGEREF _Toc223671780 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380030000000}}}{\fldrslt {
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 13}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671781"}{\rtlch\fcs1
\af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380031000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802
International Aspects and the CM&C Test}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692
PAGEREF _Toc223671781 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380031000000}}}{\fldrslt {
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 13}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s25\qj \li220\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin220\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671782"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380032000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 Operational Details}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671782 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380032000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 14}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s27\qj \li440\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin440\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671783"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380033000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802
Negative Taxable Components}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671783 \\h }{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380033000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 14}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671784"}{\rtlch\fcs1
\af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380034000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802
Issues Related to Withdrawals and Transfers}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692
PAGEREF _Toc223671784 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380034000000}}}{\fldrslt {
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 15}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671785"}{\rtlch\fcs1
\af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380035000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 Educating Consumers}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671785 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380035000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 15}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671786"}{\rtlch\fcs1
\af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380036000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 Costs}{\rtlch\fcs1 \af0
\ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671786 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380036000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 15}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s25\qj \li220\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin220\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671787"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380037000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802
Defined Benefit Funds and Retirement Annuities}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692
PAGEREF _Toc223671787 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380037000000}}}{\fldrslt {
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 15}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s27\qj \li440\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin440\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671788"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380038000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 Retirement Annuities}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671788 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380038000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 16}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s25\qj \li220\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin220\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671789"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380039000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802
How Should the Life Savings System be Used?}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692
PAGEREF _Toc223671789 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700380039000000}}}{\fldrslt {
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 17}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s26\qj \li0\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671790"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700390030000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 Positives and Negatives}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671790 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700390030000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 18}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671791"}{\rtlch\fcs1
\af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700390031000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802
Transition to the New System}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671791 \\h }{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700390031000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 23}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s25\qj \li220\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin220\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671792"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700390032000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802
Assets Initially Exceeding Asset Thresholds}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692
PAGEREF _Toc223671792 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700390032000000}}}{\fldrslt {
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 23}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671793"}{\rtlch\fcs1
\af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700390033000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802
Recipients of Superannuation Pensions}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692
PAGEREF _Toc223671793 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700390033000000}}}{\fldrslt {
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 23}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s26\qj \li0\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671794"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700390034000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802
Alternatives, Comments and Tax Minimisation}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692
PAGEREF _Toc223671794 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700390034000000}}}{\fldrslt {
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 24}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s25\qj \li220\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin220\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671795"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700390035000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 Alternatives}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 PAGEREF _Toc223671795 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700390035000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0
\lang1024\langfe1024\noproof\webhidden\insrsid13398692 24}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\s27\qj \li440\ri0\widctlpar\tqr\tldot\tx8606\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin440\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255
{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671796"}{\rtlch\fcs1 \af0
\ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700390036000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802
Allowing Full Deductibility of Contributions}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692
PAGEREF _Toc223671796 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700390036000000}}}{\fldrslt {
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 24}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }{\field\fldedit{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 HYPERLINK \\l "_Toc223671797"}{\rtlch\fcs1
\af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid3809907 {\*\datafield
08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700390037000000}}}{\fldrslt {\rtlch\fcs1 \af0 \ltrch\fcs0 \cs36\ul\cf2\lang1024\langfe1024\noproof\insrsid13398692\charrsid2233802
An Alternative Treatment of Death Benefits}{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 \tab }{\field{\*\fldinst {\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692
PAGEREF _Toc223671797 \\h }{\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\insrsid13398692 {\*\datafield 08d0c9ea79f9bace118c8200aa004ba90b02000000080000000e0000005f0054006f0063003200320033003600370031003700390037000000}}}{\fldrslt {
\rtlch\fcs1 \af0 \ltrch\fcs0 \lang1024\langfe1024\noproof\webhidden\insrsid13398692 24}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
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\lang1024\langfe1024\noproof\webhidden\insrsid13398692 25}}}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0\afs24 \ltrch\fcs0
\f0\fs24\lang1024\langfe1024\noproof\langnp1033\insrsid13398692
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 }}\pard\plain \ltrpar
\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 \sectd
\linex0\endnhere\sectlinegrid360\sectdefaultcl\sftntj {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par {\listtext\tab}}\pard\plain \ltrpar\s1\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\outlinelevel0\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs30\ul\lang3081\langfe255\kerning1\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 \page {\*\bkmkstart _Toc223671763}Summary{\*\bkmkend _Toc223671763}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par The provision of substantial tax subsidies to those who do not or should not need them is probably unsustainable and relatively ineffective in reducing reliance on the age pension. {\*\xmlopen\xmlns2{\factoidname country-region}}
{\*\xmlopen\xmlns2{\factoidname place}}Australia{\*\xmlclose}{\*\xmlclose}'s superannuation system results in a shrinking population of primarily younger working families on lower incomes paying higher taxes to su
bsidise the retirement lifestyles of the wealthy elderly. Alongside the income tax system, superannuation incorporates a 15% flat tax system. This parallel tax system offers legal avoidance of potentially tens of thousands of dollars in tax for those weal
thy enough to put away up to $250,000 each year while providing relatively little or no incentive for low income earners who most need to save for retirement.
\par
\par The current system is still complicated, requires employer agreement to maximise savings and rest
ricts the amount that can be contributed or withdrawn each year. The bias of incentives toward the wealthy results in many Australians making little progress toward adequate retirement saving. This document presents a proposal to replace superannuation wi
th a Life Savings System (LSS) that will remove the regressive nature of the current system, reduce complexity and increase flexibility.
\par
\par {\*\bkmkstart _Toc223671764}{\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 For the Majority{\*\bkmkend _Toc223671764}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par For most Australians, the Life Saving System (LSS) will be as follows:
\par
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 1.\tab}}\pard \ltrpar\qj \fi-360\li720\ri0\widctlpar
\jclisttab\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls2\adjustright\rin0\lin720\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 All current superannuation ho
ldings declared tax free and all funds converted into Life Savings Funds (LSFs) with each member holding a Life Savings Account (LSA).
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 2.\tab}
No taxes in funds: superannuation contributions tax and taxes on earnings abolished. This removes the flat tax system.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 3.\tab}No
tax deductions for contributions and no restrictions on contributions. This substantially reduces the tax expenditure and helps in allowing most restrictions on contributions and withdrawals to be eliminated for almost everyone.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 4.\tab}Continuing and later expan
ding compulsory savings starting at 7% of after tax pay along with a 9% pay increase which results in no additional cost to employers. Employer involvement is not required for additional contributions as they would be from taxation revenue. No need for re
strictions on beneficiaries of contributions.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 5.\tab}
An expanded system of co-contributions to pay for a universal age pension system. The extra tax revenue arising from the Life Savings System gives the government the option of increasing its direct contributions
. (Subject to fiscal policy this may not be means tested.)
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 6.\tab}
Contributions from members become the 'tax free component' (indexed to inflation) of each account. The remainder (earnings, government contributions & insurance payouts) is the 'taxable component'. (See next point).
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 7.\tab}
No restrictions on withdrawals past say age 60 with the taxable component to be taken first and added to taxable income. This should mean that many will not pay tax and most people will only pay tax for a few years into their retirement
and then enjoy tax free income and a tax free lump sum that they can pass on to whoever they wish. All existing balances would be declared tax free.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par This system encourages pensions over lump sums and the transition from the current system would be simple. There is some complexity in the Life Saving System, but it is primarily confined to a small and wealthy minority.
\par
\par {\*\bkmkstart _Toc223671765}{\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 More Wealthy Account Holders{\*\bkmkend _Toc223671765}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af39\afs18 \ltrch\fcs0 \f10\fs18\lang3081\langfe255\langfenp255\insrsid13398692 \loch\af10\dbch\af0\hich\f10 \'6c\tab}}\pard \ltrpar\qj \fi-360\li720\ri0\widctlpar
\jclisttab\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls3\adjustright\rin0\lin720\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 An excess contributions tax of 20% per annum will apply to the amount by which the total of the tax free compo
nents of all holdings exceeds $3 million (indexed to CPI).
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af39\afs18 \ltrch\fcs0 \f10\fs18\lang3081\langfe255\langfenp255\insrsid13398692 \loch\af10\dbch\af0\hich\f10 \'6c\tab}
An excess assets tax on the total amount (tax free and taxable) accumulated beyond $4 million (indexed) of 5% per annum and on the amount beyond $5 million (indexed) of 50% per annum.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af39\afs18 \ltrch\fcs0 \f10\fs18\lang3081\langfe255\langfenp255\insrsid13398692 \loch\af10\dbch\af0\hich\f10 \'6c\tab}These excess
taxes apply together and both would be payable by the member, not the fund. Withdrawal is allowed at any time of the total of a person's accounts exceeding $2 million with the same rule of taxable component first.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af39\afs18 \ltrch\fcs0 \f10\fs18\lang3081\langfe255\langfenp255\insrsid13398692 \loch\af10\dbch\af0\hich\f10 \'6c\tab}Removal of most of the restrictions on investments and gearing.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par These changes should be accompanied by an increase in the income tax-free threshold, modification of the capital gains tax regime, removal of the low income tax offset (which increases marginal tax rates higher up the scale), removal
of the higher tax free income threshold for seniors, removal of the small business retirement and capital gains tax concessions and incorporation of the Medicare levy into the normal tax scales.
\par
\par The proposed system is biased toward low to middle income e
arners. This compares to the current superannuation system with its substantial loss of tax revenue from contributions, investment earnings in both accumulation and pension phase and payments to those aged over 60. The current system offers unlimited tax
concessions on investment returns in superannuation.
\par
\par {\*\bkmkstart _Toc223671766}{\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 For the Federal Government{\*\bkmkend _Toc223671766}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par An aging population receiving tax free superannuation pensions will increase the taxation burden on the shrinking proportion of workers. These proposals address that problem w
hile reducing complexity and administrative workload, increasing flexibility, facilitating more orientation toward compulsory saving, reducing \'93double dipping\'94
and achieving a fairer society. The proposed system should result in additional tax revenue beca
use of the removal of all tax deductions for contributions (offset to some extent by the removal of the two 15% taxes in funds). In the short term there will be little tax revenue from payments to retirees but this will grow over time. The extent of the r
evenue gain may justify additional government contributions with or without corresponding member contributions to assist lower income earners save and substantially reduce future demands for age pensions.
\par
\par
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 This document argues for removal of the current ta
x subsidies for saving via superannuation and advocates greater reliance on compulsory saving in a less regressive and administratively complex framework. Governments then have the option of either utilising those tax subsidies to transparently contribute
to savings, lower income taxes or both. }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par {\listtext\tab}}\pard\plain \ltrpar\s1\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\outlinelevel0\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs30\ul\lang3081\langfe255\kerning1\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 \page {\*\bkmkstart _Toc223671767}Objectives{\*\bkmkend _Toc223671767}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par Proposals for tax reform often have stated objectives of efficiency, equity and simplicity. A fourth objective could be added: to achieve a tax system that anticipates future problems and achieves the
above three objectives for the very long term, because the need for \'93grandfathering\'94
in relation to changes has created immense complexity in the past. The current Australian savings system is unimpressive in terms of all four of these, but particularly in
the areas of equity and suitability for the long term, both from the perspectives of wealth and age.
\par
\par The objectives of the following proposals are to propose a solution to the problems of the current superannuation system, particularly its inconsistency
with the progressive income tax scale and the fact that higher income earners can access much greater incentives than low income earners, to further reduce complexity and to provide a system that has a good chance of surviving for all of the 21}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \super\insrsid13398692 st}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 century (
at least). These proposal are also based on removing many of the current superannuation rules that are not related to tax, unless there is a strong case for retention, and trying to minimise the number of people that have to lodge tax returns and/or need
complicated financial advice to save and retire.
\par
\par Finally, because the Australian Government is the last resort provider of retirement income to those citizens who fail to save adequately or lose their savings then it seems appropriate to reduce the risk to
taxpayers of providing this insurance. If tax incentives for saving are continued then it could be argued that objectives of the retirement savings system should be to encourage pensions rather than lump sums and to limit tax incentives to encouraging th
at level of savings equivalent to or a little above the present value of the age pension at retirement.
\par
\par {\*\bkmkstart _Toc223671768}{\listtext\tab}}\pard\plain \ltrpar\s1\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\outlinelevel0\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs30\ul\lang3081\langfe255\kerning1\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 A Summary of the Problems{\*\bkmkend _Toc223671768}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par A major problem with the current superannuation system is the application of taxes within funds, which by administrative necessity, must be flat taxes. {\*\xmlopen\xmlns2{\factoidname place}}{\*\xmlopen\xmlns2{\factoidname country-region}}Australia
{\*\xmlclose}{\*\xmlclose} has a progressive income tax on the employment and investment earnings of individuals. There are potentially three taxing points associated with superannuation apart from the income tax system. All of these create costs
in funds. Tax on payouts was eliminated for those over 60, but prior to that most Australians did not pay tax on most of their superannuation.
\par
\par In summary, the current superannuation system offers substantial tax subsidies to save for retirement to those
who do not or should not need them, while lower income earners who are most likely to have inadequate retirement savings and be dependent on the aged pension receive much less. It is primarily younger working families on lower incomes that pay more tax to
subsidise the retirement lifestyles of the wealthy elderly. In addition, there is no obligation on those retirees who have benefited from substantial tax subisidies all their working life to apply those savings to avoiding dependence on the age pension in
retirement.
\par
\par {\*\bkmkstart _Toc223671769}{\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Inconsistency of Policy{\*\bkmkend _Toc223671769}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par The current regime for taxation of superannuation turns the progressive personal tax system upside down, providing substantial tax savings for higher income earners and little or even additional tax for lower income ea
rners. In effect, it provides partial access to a flat tax of 15% to high income earners that is only partly available and of little or no benefit to low income earners who are the ones most in need of assistance to save to avoid the age pension. The foll
owing are the major inconsistencies within superannuation and with the progressive income tax system that can be exploited by more wealthy citizens with advice usually not available to those on low incomes:
\par
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 1.\tab}}\pard \ltrpar\qj \fi-360\li360\ri0\widctlpar
\jclisttab\tx360\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls10\adjustright\rin0\lin360\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Taxation of the assets backing superannuation acc
ounts changes from a nominal 15% to zero as the beneficiary goes from accumulation to pension phase. This creates another tax opportunity for more wealthy citizens who have their own self managed superannuation funds (SMSFs) and can avoid capital gains ta
x on growth in assets in the fund by holding them until they take a superannuation pension.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 2.\tab}}\pard \ltrpar\qj \fi-360\li360\ri0\widctlpar
\jclisttab\tx360\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls10\adjustright\rin0\lin360\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
Taxpayers provide substantial tax incentives for superannuation savings but fund members are not required to commit to applying those savings to fund their own reti
rements and any member can still be totally reliant on the aged pension, even if they accumulate hundreds of thousands of dollars in superannuation. For example, a fund member on the top marginal tax rate can salary sacrifice throughout their working life
(costing up to tens of thousands of dollars per annum in lost tax revenue), withdraw all their superannuation after age 60 with no tax clawed back by the government and immediately gamble away the full amount. Other taxpayers have paid more tax to make up
for the gambler's tax deductible superannuation savings and are then required to finance a pension for the rest of this person's life. This is called \'93double dipping\'94 and has been exacerbated by former Treasurer Peter Costello\rquote
s changes because at least under the previous system there was some tax on most larger withdrawals from superannuation.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 3.\tab}}\pard \ltrpar\qj \fi-360\li360\ri0\widctlpar
\jclisttab\tx360\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls10\adjustright\rin0\lin360\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
Transition to retirement (TTR) pensions amplify the benefits available to those on higher incomes, particularly by eliminating tax on superannuation holdings. For e
xample, take a person between 50 and 60 years of age on the top marginal tax rate with $2 million in superannuation. On a TTR pension this person must take an annual payment of at least 4% of the balance which will be $80,000pa. Only part of this, say $50
,000, will be taxable with a 15% tax offset. But if $50,000 is \'93salary sacrificed\'94
, this eliminates any additional tax due to the superannuation pension but retains the 15% tax offset, which would be useful for a person on the top marginal tax rate. A 15% c
ontributions tax applies on the salary sacrifice of $50,000, so this exercise is tax neutral. What is not tax neutral is the elimination of all tax on the $2 million in superannuation providing the pension. If the underlying assets generate a taxable retu
r
n of 4%pa then the annual tax due on this in the accumulation phase is $12,000. Thus by taking a TRP this person saves $12,000pa in tax on their superannuation while not suffering any change in their personal tax position. This is not the full tax story,
however, as the tax free part of the pension can finance higher levels of salary sacrifice to further reduce income tax.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 4.\tab}}\pard \ltrpar\qj \fi-360\li360\ri0\widctlpar
\jclisttab\tx360\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls10\adjustright\rin0\lin360\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
There is an anomaly in Peter Costello's system in relation to death. Benefits paid to a member over the age of 60 are tax free but if p
aid to a non-dependant of the member after death (such as adult offspring), then the whole taxable component of the payment is subject to tax, irrespective of the age of the recipient. Whilst this gives an advantage to those notified of their imminent dea
th (when it becomes prudent for those over 60 years to cash out all remaining superannuation tax free to avoid beneficiaries paying tax), it is of little help to the majority who die unexpectedly.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 5.\tab}}\pard \ltrpar\qj \fi-360\li360\ri0\widctlpar
\jclisttab\tx360\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls10\adjustright\rin0\lin360\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 The substantial tax advantages of contributions to superann
uation for those near 60 years of age can be \'93donated\'94
to younger relatives to allow them to save with only a 15% tax rate by giving amounts to their parents to put into superannuation and take out tax free later. Potentially $150,000pa could be directed into this strategy.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par {\*\bkmkstart _Toc223671770}{\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Infexibility{\*\bkmkend _Toc223671770}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par {\*\bkmkstart _Toc223671771}{\listtext\tab}}\pard\plain \ltrpar\s3\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl2\outlinelevel2\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs24\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 For the Australian Government{\*\bkmkend _Toc223671771}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par }\pard\plain \ltrpar\s26\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692 Up to a point (and that may be up to $30 billion per annum), governments now and into the future have no control over the level of tax expenditure on superannuation tax concessions. This is i
llustrated by the inconsistency of the current situation where the Australian Government is spending large amounts of money to stimulate demand and hoping these amounts will not be saved while at the same time continuing to offer huge tax concessions to h
igher income earners to save via superannuation.
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par {\*\bkmkstart _Toc223671772}{\listtext\tab}}\pard\plain \ltrpar\s3\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl2\outlinelevel2\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs24\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 For Individuals{\*\bkmkend _Toc223671772}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 1.\tab}}\pard \ltrpar\qj \fi-360\li360\ri0\widctlpar
\jclisttab\tx360\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls11\adjustright\rin0\lin360\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
Caps on contributions and minimum and maximum levels for pensions restrict flexibility and enforce lower levels of saving than some people may desire. Caps on contributions are a legislated
constraint on saving every year, they do not suit the changes in capacity to contribute as people age, they do not allow for changing preferences through life and they are difficult to administer (potentially for every single person, particularly with mul
tiple funds). These administrative costs fall on the funds and thus every member.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 2.\tab}}\pard \ltrpar\qj \fi-360\li360\ri0\widctlpar
\jclisttab\tx360\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls11\adjustright\rin0\lin360\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
A problem with minimum levels for pensions has emerged following the massive declines in stockmarkets over 2008. The levels of pensions are determined on asset values at a pa
rticular point in time and beneficiaries are complaining that they are being forced to take higher pensions than they would at current valuations and thereby realise losses on share investments.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 3.\tab}}\pard \ltrpar\qj \fi-360\li360\ri0\widctlpar
\jclisttab\tx360\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls11\adjustright\rin0\lin360\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Still employer/work related: Obtaining tax deductions for su
perannuation contributions beyond the compulsory 9% pa is dependent on the agreement of employers because deductible contributions by individuals are primarily restricted to the self-employed, again presumably so that the benefits of the tax deductions do
not place an excess burden on government revenue. This makes extra tax deductible contributions difficult or impossible for some and interferes with calculations of remuneration related to overtime. Individuals should be able to save whatever they want in
a tax-preferred fund without needing the agreement of their employer.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 4.\tab}}\pard \ltrpar\qj \fi-360\li360\ri0\widctlpar
\jclisttab\tx360\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls11\adjustright\rin0\lin360\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
The abolition of tax on all superannuation benefits paid after 60 years of age may encourage earlier retirement by many individuals than might otherwise be the case.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par {\*\bkmkstart _Toc223671773}{\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Complexity{\*\bkmkend _Toc223671773}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par The Co
nsultation Paper illustrates some of the continuing complexity with the current system. This level of complexity is unnecessary and is partly due to trying to contain the extent of the tax expenditure. For example, what other justification is there for al
lowing tax deductible contributions by employers and the self-employed but not for the vast majority of employees?
\par
\par Whilst tax does not apply on payments from superannuation to those over 60, data on taxable components must be maintained in case the member
dies and payments are made to non-dependants (who are likely to be subject to tax on the payments). There are also complicated rules relating to contributions, death benefits, gearing and what investments are allowed. All this causes administration costs
for superannuation funds and issues in valuing members' holdings.
\par
\par {\*\bkmkstart _Toc223671774}{\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Sustainability?{\*\bkmkend _Toc223671774}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par With an aging population and the probability of economic downturns in the future, it is questionable whether the current system is sustainable from a government revenue pers
pective. It also may not be sustainable from a political perspective as younger voters become aware of the extent to which they are subsidising wealthy older voters with their taxes.
\par
\par {\*\bkmkstart _Toc223671775}{\listtext\tab}}\pard\plain \ltrpar\s1\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\outlinelevel0\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs30\ul\lang3081\langfe255\kerning1\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 The Proposed Solution \endash The LSS{\*\bkmkend _Toc223671775}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par A summary of the main points of a reformed savings system (the Life Savings System or LSS) consisting of Life Savings Funds (LSFs) holding Life Savings Accounts (LSAs) to replace the current superannuation system is as follows:
\par
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 A)\tab}}\pard \ltrpar\qj \fi-360\li720\ri0\widctlpar
\jclisttab\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls4\adjustright\rin0\lin720\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 All tax deductions to be abolished for contributions, contribution
s to be only allowed from natural persons (individuals, although companies could pass the contributions on) and superannuation contributions tax (the tax within funds) to be abolished. Rationale: These flat taxes are the root of many of the problems and a
re unnecessary and inappropriate in parallel to a progressive income tax system.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 B)\tab}
All tax on investment earnings within funds to be abolished so all capital gains and income would be tax free with franking credits on dividends from Australian company shareho
ldings to be fully refundable to the Life Savings Fund. Thus there is no distinction between a fund in accumulation and a fund in pension phase. The rationale for the removal of all tax from within funds is to shift all the tax process back to the income
t
ax system, an existing fundamental generator of government revenue, rather than continuing with a partially duplicated tax system in the funds with its associated administrative cost and lack of progressive rates. (Note that remittance of PAYG for some wi
thdrawals will continue \endash see below.) The abolition of contributions and earnings taxes will reduce ongoing administration costs and increase flexibility for the system.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 C)\tab}Compulsory contributions to be a much more important contributor to private savings, pa
rticularly for the lower paid, with an initial level of 7% of after tax pay (hence the lower rate). The objective is to ensure an increase in compulsory contributions over time (with an early start) so that most citizens will not need the old age pension.
This would be by directing future tax cuts into compulsory contributions. The current system of co-contributions could be retained intially and replaced over time with an expanded system of government contributions from tax revenue. On implementation of t
his system, the before tax pay of all affected employees would have to be increased by about 9% to compensate for the loss of the current 9% \'93superannuation guarantee\'94
. (The objective is to ensure no change in costs to employers.) The resulting percentage i
ncrease in after tax salary depends on the average and marginal tax rates of the employee (which are interrelated depending on the original dollar remuneration). Note that for those on higher incomes and thus higher tax rates, the initial compulsory contr
i
bution will be a lower percentage of gross cash salary, but they are less likely to need compulsory contributions. Rationale: Compulsory contributions are well accepted and justified given the government's liability for old age pensions. They are a better
way of achieving savings that reduce or eliminate reliance on the age pension than regressive tax subsidies that have not been demonstrably useful in increasing savings.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 D)\tab}Life savings accounts (LSAs) to consist of 2 components: tax free and taxable. The tax
free component is the amounts contributed, indexed to inflation. At any time during a financial year, the tax free component will be the value of the tax free component at the most recent 30 June plus any subsequent contributions to that point in time. T
h
e value at any 30 June will be the value for one year earlier, increased by the change in the Consumer Price Index (CPI) for the last calendar year, plus any contributions up to the 30 June in question. The taxable component is defined as the remainder (w
h
ich is earnings plus insurance payouts less expenses). Thus the tax free component will usually change after contributions and every year on 30 June, even after the member has retired. If accounts are shifted between funds then the dollar amount of the ta
x
free component transferred does not change. It is added to the tax free component of the account in the receiving fund. Note that these amounts are determined throughout the life of an account by multiplying one by an indexation factor and subtracting to
determine the other, not by the complicated method of calculating a ratio. (See below re defined benefit funds.) It may be appropriate for administrators to keep a record of the history of changes to the tax free component for each member in accumulation
funds. Rationale: Contributions, which are after tax, should be able to be withdrawn tax free and indexed to ensure that their value is not eroded by inflation.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 E)\tab}No limits on contributions for persons over age 18 (although see below re tax on 'excess contrib
utions'): Because this system does not offer the substantial upfront tax deductions available to some taxpayers, there is not the need for tight limits on contributions (or as much government interference in the running of funds \endash
see below). Compulsory co
ntributions could be split with anyone else such as a dependant wife. Anyone (bankrupts excepted) could make a contribution on behalf of themselves or anyone else of any age over 18 and irrespective of whether they are doing paid work or not, so the disab
l
ed, people overseas or on welfare and the elderly could be beneficiaries of, and make contributions on behalf of, themselves or anyone else. Rationale: Simplification and to give more flexibility, suiting a wide range of preferences, life styles and life
outcomes. Existing accounts for children under age 18 could be maintained without contributions until they become adults.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 F)\tab}
Withdrawals of taxable components will be added to the account holder's taxable income and therefore effectively taxed at their margina
l rate. All withdrawals must be from the most recent 30 June taxable component first (rather than a figure calculated at the time of withdrawal as this component could vary continuously). There would be no rules regarding maximum and minimum withdrawals.
C
ertain withdrawals at any age to be allowed, including the same rules as apply at present (such as for terminal illness) and for holdings over $2 million, with any taxable components to be withdrawn first and added to the recipient's taxable income. Apart
from stipulated exemptions, the current preservation rules would apply to the age at which withdrawals would be allowed (55 years phasing to age 60 with access for retirees from age 55). Rationale: Since there is no tax in LSFs, there must be tax on withd
r
awals of investment earnings to avoid tax distortions. Requiring withdrawal of taxable components first avoids loss of revenue for too long, avoids application of complicated ratio analysis and means that most people's tax liability on pensions will occur
early in their retirement, leaving them tax free for the rest of their lives. (See below re annuities.)
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 G)\tab}
An excess contributions tax of 20% per annum will apply to the amount by which the total of each person's tax free components in all their LSAs exceeds
$3 million (indexed). (See next paragraph re individual responsibility for paying this tax.) Rationale: Although this system does not need the same tight controls on contributions as the current system to prevent massive loss of government revenue, it doe
s need some limits (because of deferral of tax) which will obviously only apply to a very small percentage of the population, if any.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 H)\tab}
An excess assets tax of 5% per annum would apply to the total amount (tax free and taxable) accumulated across all accounts
by an individual which exceeded $4 million (indexed) and to the amount beyond $5 million (indexed) of 50% per annum. Funds would have to report every member's account balance at 30 June every year and it would be each affected member's responsibility to
c
alculate, declare and pay these taxes, avoiding any additional administration for the funds. (The total holdings would be calculated as averages of the start and end values for the financial year, with appropriate anti-avoidance measures applying. The thr
e
sholds would be indexed to CPI.) Those members with a liability under this provision would have to pay the tax from their own financial resources. Total amounts in LSAs exceeding $2 million could be withdrawn at any time. Note that these two tax measures
affect only a small minority of the population and those with sufficient financial resources to deal with any administrative costs generated, rather than the majority being burdened with the costs via additional fees in their funds.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 I)\tab}Most restrictions on inv
estments by funds to be removed including the prohibitions on gearing, acquisition of unlisted assets from members and buying residential real estate except that all transactions with funds to be on a demonstrable \'93arm's length\'94
basis with the onus of proo
f on members. Borrowing to be non-recourse only. Restrictions on inhouse assets would remain so Life Savings Funds (LSFs) could not hold shares in the private company of any account holder beyond the current 5% limit. This is because the refund of franki
n
g credits would allow tax free accumulation of income, contrary to the principle of no tax deductions for contributions. The current effective prohibition on funds operating businesses would continue. Lending to members and associates to be permitted but
o
nly if sufficient security external to the fund was provided. That is, a member could not borrow from a Life Savings Fund just on the recognition that he/she had contributed assets to that fund. Also, members of Private Life Savings Funds (see below) coul
d not borrow more than their account value. Rationale: Individuals can borrow as much as their offering of security will allow and invest in geared unit trusts, so why restrict savings vehicles?
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 J)\tab}Welfare: The total of a member's accounts (both taxable and ta
x free components) would be included for assessment under the assets test, except for the existing exemptions for those under pension age. All withdrawals of taxable components would be included in the income test.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 K)\tab}LSFs to be either accumulation or defined
benefit and if the former, reserving is not allowed. (Reserves to be allocated as of the starting date and included in the tax free component.) Any taxed defined benefit fund could transition to be a Life Savings Fund but subsequent contributions to it c
o
uld only be from individuals from their after tax dollars. The calculation of the tax components of defined benefit LSFs would be the same as for accumulation LSFs (see below). New defined benefit funds could still be started but only by insurance compani
es supervised by APRA with tax free pools and with contributions only from individuals. Transition issues are addressed below.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 L)\tab}
Self-managed superannuation funds (SMSFs) to be replaced by Private Life Savings Funds (PLSFs) which could have a maximum of 10 me
mbers (versus 4 for SMSFs) with tight controls to ensure that small business owners do not coerce employees into funds that they create, etc. Maintaining the existing rules for who can be a member may be the best policy.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 M)\tab}Transfers: Account holders could tr
ansfer all or part of their accounts to any other LSF provided the owner of the account does not change. The tax free and taxable components of the amount transferred would be as calculated above at the date of transfer and there would be full flexibility
in partial transfers as regards the ratio of the 2 components in the amount shifted. Any taxable components withdrawn must be added to the account holder's taxable income.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 N)\tab}Insurance: There is no tax in LSFs and therefore no deductions but life and disabili
ty insurance could be offered with no tax payable in the fund for insurance payouts to the fund. Premiums would come from the taxable component and insurance payouts would form part of the taxable component.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par Note that the above proposals still involve a d
eferral of tax and this effectively provides a subsidy and the electorate is accustomed to this for saving. However, the approach under the Life Savings System to achieve the objective of replacing the age pension is primarily via compulsion rather than t
ax subsidies with the option of government contributions that can be varied from year to year, giving maximum flexibility to the government.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par {\*\bkmkstart _Toc223671776}{\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Associated Changes{\*\bkmkend _Toc223671776}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par If Australian Governments were to adopt an objective of creating a government defined benefit s
cheme to replace the aged pension then additional government revenue will probably be required. The following addresses that issue, along with options for additional government contributions to saving by individuals.
\par
\par {\*\bkmkstart _Toc223671777}{\listtext\tab}}\pard\plain \ltrpar\s3\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl2\outlinelevel2\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs24\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Possible Government Contributions{\*\bkmkend _Toc223671777}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Thi
s document questions the need to subsidise saving beyond that required to achieve the age pension or somewhat more. However, this section presents some options if governments decide that the Life Saving System does not include sufficient incentives.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par To su
bsidise savings in conjunction with the Life Savings System, governments could provide co-contributions or an expanded government contributions scheme with the additional tax revenue resulting from the elimination of tax deductible contributions to supera
n
nuation. Governments could vary their contributions depending on fiscal conditions, which is an advantage over the relatively rigid current system. The amounts to be contributed could be announced each year in the Federal Budget to avoid an impression tha
t they are a normal part of the system.
\par
\par Any government contributions would be included in the taxable components of LSAs so they potentially become subject to deferred tax (on withdrawal) for those with more assets/income but will be subject to lower or ze
ro tax for low income earners. (Rationale: If the contribution is based on a measure that the recipient is in need of assistance at the time, the recipient's financial circumstances may improve substantially in later life.)
\par
\par Another method of providing eff
ective government contributions would be to channel tax reductions into Life Savings Accounts rather than providing cuts in income tax. Prior to the financial market problems of 2008 there were calls for tax cuts to be contributed to superannuation. The L
ife Savings System makes it easier to do this by decreasing taxes but concurrently raising the compulsory contribution rate by an equivalent amount.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par {\*\bkmkstart _Toc223671778}{\listtext\tab}}\pard\plain \ltrpar\s3\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl2\outlinelevel2\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs24\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 CGT Changes{\*\bkmkend _Toc223671778}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
Alongside the introduction of the Life Savings System, the current capital gains tax (CGT) reg
ime that is more generous than the tax on income would have to be changed as it provides a better avenue for deferring and reducing tax for those more financially able than the LSS. In other words, the same arguments for altering the superannuation system
of equity and achieving a consistent tax system apply to CGT, which provides a similar lower tax alternative in parallel to the income tax system. Various CGT reform options are possible, such as the return of indexation to CPI and \'93averaging\'94
as applied b
efore, which is only marginally more complicated than the current system. (The current system requires records of acquisition cost and acquisition date for each asset. The indexation system that applied originally required this plus calculation of an inde
x
ed cost for each holding.) Another alternative is to reduce the discount on the amount of capital gain added to income from 50% to say 30% and allow an indexed dollar amount of capital gains to be tax free each year. The latter feature disadvantages large
indivisible assets such as real estate so an alternative to this is the carry forward of unused tax free amounts for CGT each year or an indexed life allowance per citizen for tax free capital gains.
\par
\par {\*\bkmkstart _Toc223671779}{\listtext\tab}}\pard\plain \ltrpar\s3\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl2\outlinelevel2\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025
\ltrch\fcs0 \b\f36\fs24\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Other Taxation System Changes{\*\bkmkend _Toc223671779}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par In addition to capital g
ains tax changes, the above should be accompanied by removal of the low income tax offset (which increases marginal tax rates higher up the scale), an increase in the tax free income threshold to around $15,000 to $20,000pa for every resident, removal of
t
he higher tax free income threshold for seniors and removal of the small business retirement and capital gains tax concessions. Few people understand the latter concessions, they involve compliance with highly restrictive rules, restrict liquidity in the
m
arket for small businesses and like superannuation involve reversals of the progressive tax system. The Medicare levy should also be removed and incorporated into the existing tax scales, thus removing more legislation and avoiding distortions in marginal
tax rates. Raising the tax free income threshold and applying it to everyone would obviously be very expensive but the other measures offset this change and the removal of tax deductions for superannuation contributions should result in substantial additi
o
nal revenue. The rationale for these changes is that they would rationalise and simplify taxation, lower marginal tax rates for low to middle income earners and fit well with the Life Savings System. The LSS provides an attractive replacement for some of
the existing measures.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par {\*\bkmkstart _Toc223671780}{\listtext\tab}}\pard\plain \ltrpar\s3\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl2\outlinelevel2\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs24\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Purposes of LSFs and Death of Account Holders{\*\bkmkend _Toc223671780}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
Concerns have been expressed by commentators about the need for savings for purposes other than retirement such as for medical expenses. The \'93sole purpose test\'94 should be abolished as it
effectively does not apply now. It should be replaced with a primary purpose of saving for retirement, but with recognition of ancillary purposes of supporting dependants and adding other functions regarded as socially desirable by governments.
\par
\par Death ben
efits could be paid from a Life Savings Fund to the account holder's estate if specified by the account holder or if no beneficiaries are stipulated, in which case the taxable component would all be added to the estate's income for its tax return. Any per
s
on could be nominated to receive remaining balances on the death of the member and there would be a requirement to pay out a deceased member's holding within a period of no more than 3 years from the date of death except for any recipient under the age of
18 (not necessarily a dependant) nominated by the deceased, in which case the payments could continue until the child reached the age of 18 years. Such payments would be treated the same as other withdrawals \endash
taxable components required to be taken first
and added to the beneficiary's taxable income (at adult rates for children), followed by tax free components. Recipients or guardians would have full flexibility in the frequency and size of withdrawals, just as for a retired account holders. Any amount r
emaining as the child approaches the age of 18 would have to be paid to that child prior to his or her 18}{\rtlch\fcs1 \af0 \ltrch\fcs0 \super\insrsid13398692 th}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
birthday. That is, amounts in accounts could be paid over 3 years or to the age of 18, whichever is later. The account would remain in the name of th
e deceased (as deceased) with administrators flagging that fact in their databases and recording the date of death and the recipients of the withdrawals.
\par
\par The Life Savings System could also provide an administratively simple system for governments to offer
other tax-advantaged savings schemes such as for first home owners' savings. This would be by allowing early release under specified circumstances with the same rules of taxable components first and added to the taxable income but with a direct dollar su
bsidy to offset all or part of the tax. The progressive tax system could then remove the need for means testing of the government subsidy. This approach could also be adopted for unusually high medical costs.
\par
\par {\*\bkmkstart _Toc223671781}{\listtext\tab}}\pard\plain \ltrpar\s3\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl2\outlinelevel2\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025
\ltrch\fcs0 \b\f36\fs24\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 International Aspects and the CM&C Test{\*\bkmkend _Toc223671781}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par Australians should be free to live overseas and continue to contribute to savings pools in {\*\xmlopen\xmlns2{\factoidname place}}{\*\xmlopen\xmlns2{\factoidname country-region}}Australia{\*\xmlclose}{\*\xmlclose}
and be trustees of Private Life Savings Funds. PLSFs and LSFs should therefore be available to contributions by any person irrespective of whether they reside ov
erseas, with withdrawals subject to tax as for non-residents, whether below or above retiring age. Expatriate Australians should be encouraged to maintain their savings in {\*\xmlopen\xmlns2{\factoidname place}}{\*\xmlopen\xmlns2{\factoidname
country-region}}Australia{\*\xmlclose}{\*\xmlclose}, not discouraged as at present (probably because of the revenue losses inh
erent in the current system). It may even be desirable to offer LSFs as savings vehicles to overseas residents because of their tax-free status, thus providing an effective service export. (Overseas residents for tax purposes may not find the tax aspects
of withdrawal as attractive as the tax regime in their country of residence. Taxable withdrawals would be taxed as for non-residents while withdrawal of tax-free components would not attract any tax.)
\par
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 The only part of the \'93central management and control\'94 (
CM&C) test that should be applied to determine if a trust is a Life Savings Fund is that the fund was established in Australia and at least one asset of the fund is situated in Australia at the relevant time.
\par
\par {\*\bkmkstart _Toc223671782}{\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Operational Details{\*\bkmkend _Toc223671782}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par {\*\bkmkstart _Toc223671783}{\listtext\tab}}\pard\plain \ltrpar\s3\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl2\outlinelevel2\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs24\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Negative Taxable Components{\*\bkmkend _Toc223671783}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
Note that because the tax free component is determined at 30 June (and adjusted for each contribution), a Life Savings Account can have a negative taxable component. For example, say a member's total account value is $150,000 and the tax free component
is calculated at 30 June 2020 as $100,000. The taxable component (the remainder) is therefor $50,000. Say the member withdraws $50,000 (which will be all of the taxable component) during the year and after the withdrawal there is a 20% decline in the val
u
e of the member's account. This decline therefor results in an account value of $80,000 at financial year end. Assuming no other changes in value, zero inflation and no contributions or insurance payouts during the financial year, at 30 June 2021 the tax
f
ree component is still $100,000. This means that the taxable component is negative $20,000 at this date. This could then be carried forward and offset against future investment gains that would otherwise create or increase the taxable component. It could
a
lso be shifted to another Life Savings Account of that person to offset taxable components in the other account. The fund would notify a negative taxable component to the member who could instruct the fund to notionally distribute it for that or any futur
e financial year, but only based on the value of the taxable component at the end of the financial year. In the example above, the member would be notified of a negative tax component of $20,000 at 30 June 2021. That member could instruct the fund to \'93
distribute\'94
that negative tax component to the member (continuing the rule that taxable components must be withdrawn first) and he/she would include it as a tax deduction for the 2020/21 financial year or the 2021/22 financial year. If this action was taken the
n the member's account at 1 July 2021 would show $80,000 as the holding, all tax free, with a zero taxable component. Any negative tax free components could be carried forward indefinitely either by the member in their individual tax returns or by the fun
d in the member's account, until obliterated by either sufficient personal income in the former case or sufficient investment returns generating taxable components in the latter case.
\par
\par It is also possible that all cash could be withdrawn from an account but
a negative taxable component remains. As above, this would be notified to the member who could leave it in the fund (but only if the trustees of the fund agreed), instruct the fund to shift it to an account in another Life Savings Fund or \'93withdraw
\'94 it and obtain a tax deduction equal to the negative taxable component for that member for the year in which all the cash was withdrawn or the subsequent financial year.
\par
\par The above situations should be uncommon for retirees. If they occur and create an administr
ative difficulty for financially unsophisticated account holders then there could be a default option for funds whereby the negative taxable component is notified by the fund to the Tax Office which automatically deducts it from the account holder's taxab
l
e income when he/she submits a tax return and/or carries it forward. Note that transfer of the negative taxable income to the member could only occur once the member had met the conditions for withdrawal from funds, which is another reason why most accoun
t holders would not need to know about this aspect of the system.
\par
\par This approach provides a tax offset that advantages individuals in relation to their personal tax situation when substantial market declines decimate account balances as has happened recently with superannuation funds.
\par
\par {\*\bkmkstart _Toc223671784}{\listtext\tab}}\pard\plain \ltrpar\s3\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl2\outlinelevel2\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs24\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Issues Related to Withdrawals and Transfers{\*\bkmkend _Toc223671784}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
Holdings can only be transferred between funds in the name of the member, not to other members without first withdrawing the holding and paying any tax that may be due. (Note this d
ifference with contributions, which can be made by anyone to anyone else, except children under the age of 18 years.)
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
The PAYG system for employees would apply to withdrawals so funds would have to maintain tax file numbers and collect a form (as per empl
oyment arrangements) regarding the tax status of the member. (Funds would have to report payments, both components and total holdings to the ATO for 30 June each year.) Over the next 10 or more years, many or most retirees should either start with or soon
get to a situation where they will pay no tax on the withdrawals \endash see Transition below.
\par
\par {\*\bkmkstart _Toc223671785}{\listtext\tab}}\pard\plain \ltrpar\s3\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl2\outlinelevel2\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs24\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Educating Consumers{\*\bkmkend _Toc223671785}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
Given the proposals to reduce regulation included in this document, the losses of investors' funds in bad investments in recent years and the re
sponsibility being given to citizens to manage their own retirement savings, governments should include basic training in investment matters early in the education system and put more resources into improving the investment knowledge of the general popula
tion. Being an Australian citizen now requires an understanding of the relationship between risk and return and that \'93guaranteed\'94
investments do not continuously generate returns exceeding 20%pa in a low inflation environment, for example. The education sho
uld also cover the Life Savings System so there is eventually clarity in the minds of all voters as to how taxation works in relation to retirement savings.
\par
\par {\*\bkmkstart _Toc223671786}{\listtext\tab}}\pard\plain \ltrpar\s3\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl2\outlinelevel2\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs24\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Costs{\*\bkmkend _Toc223671786}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par The Life Savings System should not impose additional net administrative ongoing costs on fu
nds. The requirement to withhold tax and provide payment summaries continues to exist in the current system for members under the age of 60 and for payments from untaxed funds. Under these proposals, any payments from tax free components and from taxable
c
omponents up to the tax free threshold of the income tax system would not require tax to be withheld or payment summaries to be provided if the account holder declared no other significant income. Where tax is payable, PAYG arrangements should remove the
need for tax returns to be lodged by most recipients.
\par
\par {\*\bkmkstart _Toc223671787}{\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Defined Benefit Funds and Retirement Annuities{\*\bkmkend _Toc223671787}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
Defined benefit funds offer the attraction of pooling mortality risk, but may be risky if run by businesses other than insurance companies due to lack of
specialist expertise, possible insolvency of those businesses and ownership issues. Therefore, only insurance companies regulated by the Australian Prudential Regulation Authority should be authorised to start new defined benefit funds.
\par
\par All assets of taxe
d defined benefit funds would be declared as tax free on commencement of the Life Savings System and earnings would become tax free. Tax deductions would not be available for contributions and contributions would be sourced only from individuals. Trustees
of defined benefit funds would be authorised by the regulatory system to demand contributions from members and transfer out amounts for members if they failed to contribute. Those amounts could be transferred into accumulation accounts created for this pu
rpose or another LSF nominated by the member. (Rules such as those applying to life insurance policies could be applied to address the issue of members of defined benefit LSFs failing to contribute the stipulated amount.)
\par
\par Employees could nominate defined benefit Life Savings Funds for their compulsory contributions. If these exceeded the amounts necessary to maintain their defined benefit account then the excess could be directed into an accumulation Life Savings Fund.
\par
\par Dollars of tax fee components will us
ually be worth more to those withdrawing than taxable components. The taxable components first rule may be regarded as inequitable between members of defined benefit Life Savings Funds as taxable components will start at zero and rise over time. However,
a
pplying this rule to defined benefit LSFs is similar to the approach for accumulation funds because the change from the current superannuation system will preserve generous benefits for members of those funds. Also, the nature of defined benefit funds is
t
hat they usually cannot give members the exact return of the underlying assets of the fund. Therefore, the rule of withdrawal of taxable components first should also apply to defined benefit LSFs. This introduces some complexity into assessment of such fu
nds as prospective investments because over time they will differ in proportions of tax free components.
\par
\par It is more difficult to apply the excess contributions and assets tests to members of defined benefit funds. It is beyond the scope of this document to
nominate a methodology but a number of approaches are possible in avoiding excessive loss of tax revenue from investment earnings on assets backing very substantial future benefits. As future benefits are by definition known, actuarial calculations could
calculate present values which could then be added to other holdings to determine tax liability using the same thresholds as for accumulation funds listed above. As there cannot be early withdrawals from defined benefit funds, there would be a case for fu
n
ds to provide loans to affected members for payment of these taxes. Loans to members are allowed under the LSS, providing all transactions are on an arms length basis. Another alternative is to limit to a dollar figure the amount of pension or lump sum th
a
t can be promised from a defined benefit fund for all new accounts to prevent excessive loss of tax revenue. This would not limit individuals from saving whatever they like as they could open one or more LSAs with accumulation funds to add to their define
d benefit.
\par
\par Whatever system is chosen to calculate these taxes, it must not be more generous than the system of excess contributions and asset taxes for accumulation Life Savings Funds or it will provide another major loophole. Only a minority are members o
f defined benefit funds and an even much smaller minority would be likely to retire with benefits worth millions in current dollar terms, although this could change in the future.
\par
\par {\*\bkmkstart _Toc223671788}{\listtext\tab}}\pard\plain \ltrpar\s3\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl2\outlinelevel2\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs24\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Retirement Annuities{\*\bkmkend _Toc223671788}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par The above taxation treatment could also apply to life
time annuities offered by LSFs operated by insurance companies (only). On retirement, a person could shift their LSA balance to purchase an annuity. The taxable and tax free components would then be added to the respective components in the fund that will
provide the annuity and tax would apply as above on withdrawals. Various products could be offered such as lifetime and life expectancy annuities, with no government interference in this market other than the vital role of setting and enforcing prudential
requirements. (Except that this document proposes that the Federal Government consider starting a national defined benefit scheme to replace the age pension.) The capacity of annuities to reduce \'93double dipping\'94
may warrant some subsidy for these products. An obvious and easy way to provide this would be to offer a slightly higher tax free threshold for payments from these products. A less attractive alternative is to make annuties compulsory.
\par
\par {\*\bkmkstart _Toc223671789}{\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 How Should the Life Savings System be Used?{\*\bkmkend _Toc223671789}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par Individuals will find the ways that the proposed system best meets their needs, but some obvious general comments are:
\par
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af39\afs18 \ltrch\fcs0 \f10\fs18\lang3081\langfe255\langfenp255\insrsid13398692 \loch\af10\dbch\af0\hich\f10 \'6c\tab}}\pard \ltrpar\qj \fi-360\li720\ri0\widctlpar
\jclisttab\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls9\adjustright\rin0\lin720\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
Many may see it as attractive to hold all long term savings (up to the excess contribution and assets thresholds) for retirement in LSAs (and perhaps for
other needs such as for housing and medical expenses, subject to government policy) because their earnings are tax free within the fund and tax free components are indexed. If amounts are needed for short term problems then they can be borrowed from the L
S
F, provided a market rate of interest is paid. (Many may not see an attraction in the LSS, as many have not taken full advantage of the current highly tax advantaged system. It may be appropriate therefore to allow borrowing of part of each account at a m
a
rket interest rate.) When withdrawals are allowed for an account holder, it appears advisable for him/her to withdraw each year such that his/her taxable income is at least the dollar amount of the income tax free threshold if available. Above this, retir
e
es may prefer to withdraw according to their needs as taxable components not withdrawn are not subject to tax in the Life Savings Fund (depending on their attitude to the tax liability they leave to their heirs). If the amounts withdrawn were not required
for consumption then they could be contributed back to the fund (or perhaps to a spouse's account) to increase the tax free component. This may not be advisable if it resulted in exceeding the contributions and asset tax thresholds.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af39\afs18 \ltrch\fcs0 \f10\fs18\lang3081\langfe255\langfenp255\insrsid13398692 \loch\af10\dbch\af0\hich\f10 \'6c\tab}Couples retiring at the
same time may want a situation where each has equal taxable components to take full advantage of tax free thresholds. Flexibility of switching to others is not allowed without withdrawal (and possible tax liability from taxable components), but this coul
d be achieved over time when withdrawals are allowed. Direction of compulsory or other contributions to any other account holder is allowed prior to meeting a condition of release.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af39\afs18 \ltrch\fcs0 \f10\fs18\lang3081\langfe255\langfenp255\insrsid13398692 \loch\af10\dbch\af0\hich\f10 \'6c\tab}It is likely that the more people that receive the proceeds of a deceased's
savings in the Life Savings System, the less the total amount of tax paid. An account holder may wish to nominate a number of beneficiaries for after his/her death if there is a substantial taxable component rather than the single taxing point of an estat
e.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af39\afs18 \ltrch\fcs0 \f10\fs18\lang3081\langfe255\langfenp255\insrsid13398692 \loch\af10\dbch\af0\hich\f10 \'6c\tab}
Residents such as retirees with taxable components whose income is so low that they do not pay tax on it may be better to withdraw from their Life Savings Account to the point where the return on their personal investments verge on creating a personal ta
x liability (if they qualify to withdraw). This is because they otherwise are likely add to their taxable components in the Life Savings System and possibly generate tax liabilities later. It appears advisable to re-contribute these amounts back into the
L
ife Savings System. Taxable components not withdrawn are not subject to tax until withdrawn so the answer to this question depends on the account holder's attitude to the tax liability they leave to their heirs. An exception is where the account holder is
or may be subject to the excess contributions or excess assets taxes.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par {\*\bkmkstart _Toc223671790}{\listtext\tab}}\pard\plain \ltrpar\s1\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\outlinelevel0\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs30\ul\lang3081\langfe255\kerning1\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Positives and Negatives{\*\bkmkend _Toc223671790}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0
\insrsid13398692
\par Why would any individual save for retirement via the proposed system (in addition to the compulsory requirement)? The LSS does not continue the substantial tax incentives to higher income earners but offers the following attractions:
\par
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 1.\tab}}\pard \ltrpar\qj \fi-360\li720\ri0\widctlpar
\jclisttab\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls5\adjustright\rin0\lin720\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
No tax on investment earnings in the funds = tax deferral: The less the frequency of application of a tax of a given rate then the less its impact. Life Savings Accounts will allow
young people starting out in a job to defer tax on the earnings on their retirement savings for decades. They will see growth unhindered by taxation. In summary, the zero tax rate and full refund of franking credits makes Life Savings Funds a very attract
ive way to save for retirement (up to the point of being affected by the excess contributions and asset taxes).
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 2.\tab}The LSS provides protection from tax on account holders\rquote
after tax contributions by indexation to the CPI. This is not the case with the current
superannuation system and the full investment gains are potentially subject to tax if withdrawn before 60 years of age. Assets where the real value of principal is not protected from tax by indexation are better held within a Life Savings Account than dir
ectly by an individual or company. For example, bank accounts and bonds.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 3.\tab}Double utilisation of the income tax free threshold and/or lower income tax thresholds \endash
each year during a person's working life and each year in retirement. Employees are currently subject to a progressive tax scale on their income. Via the Life Savings System, most would get the opportunity to \'93split income\'94
through time. That is, taking advantage of the progressive tax scale again on their investment returns in retirement. If a tax-
advantaged savings alternative does not exist then earnings on investments held by individuals are added to other earnings for tax purposes. (This advantage of the LSS would not exist if a flat tax on all income was introduced.)
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 4.\tab}The proposed system moves a
way from contributions mainly deriving from employers (to achieve maximum tax effectiveness) to giving individuals the capacity to access the best tax advantages directly, either on behalf of themselves or their spouses, children (over 18 years), etc. For
example, husbands could (and under the Life Savings System should, to maximise tax benefits by splitting income in retirement) contribute on behalf of their wives while the latter are out of the workforce to give birth and raise children and still the max
imum tax advantages available under the system will be accessed. Unlike the current system, the Life Savings System does not discriminate between workers and non-workers at any age.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 5.\tab}The existing co-contribution system could be retained (or expanded because
of the elimination of the tax expenditures inherent in the current system).
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 6.\tab}
Greater flexibility with no limits on contributions or withdrawals (although tax can influence decisions with regard to the latter and at the extremities in regard to the former).
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Why would an individual not save for retirement via the proposed system?:
\par
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 1.\tab}}\pard \ltrpar\qj \fi-360\li720\ri0\widctlpar
\jclisttab\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls6\adjustright\rin0\lin720\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
The very substantial tax subsidies available via the current superannuation system would cease, and this may make saving via LSFs less attractive for higher income earners. However
, up to very high LSA balances (where the excess assets test applies), there are still attractions in the proposed system for high income earners as described above. It should be remembered that the current system also allows after tax contributions altho
ugh these go into an environment that is subject to a nominal 15% tax on superannuation investment earnings.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 2.\tab}
It is suggested by some that under the current superannuation system, lower income earners are not attracted to saving for retirement when it is far into the future (\'93myopia\'94
). The proposed system can give them some immediate cash incentives to save via greater government contributions and there are longer term attractions as described above. However, the continuation of compulsory contributions solve
s this problem to a large extent and should be expanded because the government has to \'93pick up the tab\'94
with age pensions for those who fail to save adequately. There is however a fundamental question as to whether governments should be involved in assisting citizens to save to a level much beyond the real value of the age pension.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par Attractions for government and the economy of the above system are:
\par
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 1.\tab}}\pard \ltrpar\qj \fi-360\li720\ri0\widctlpar
\jclisttab\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls7\adjustright\rin0\lin720\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Abolition of substantial tax subsidies to more wealthy taxpayers: The biggest advantage of the Life Savings
System is that it will result in a substantial saving in tax revenue that can be directed other than to primarily subsidising the retirement of people who are already comfortable and who should be self-reliant. The LSS provides a substantial shift of tax
incentives to save away from what one commentator described as \'93upper class welfare\'94
. With the tax subsidies eliminated, tax thresholds can be shifted up or marginal tax rates reduced. Alternatively, the savings could be directed into an expanded government
contribution scheme to reduce reliance on the age pension by low income earners. The LSS will also avoid the risk that the current system will become unsustainable as the population continues to age and pressures younger workers with higher taxes than wo
u
ld be the case without the tax distortions of the current system. (If governments want lower taxation for higher income earners then it seems more apppropriate to provide it in the income tax system where it may achieve higher participation rates and ince
ntives for workers.)
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 2.\tab}
Simplification: The LSS will be a less complicated system for retirement savings which should be easier to understand for people with low levels of financial knowledge and it should lower ongoing costs. Two taxes are removed from within
the savings environment. The LSS aims to use the existing income tax system (which appears likely to remain for a very long time) and remove two other taxes \endash
on contributions and superannuation fund earnings. The income tax system takes over from the con
tributions tax that currently applies to concessional contributions to superannuation. This should lower costs for the approximately 300,000 superannuation funds in {\*\xmlopen\xmlns2{\factoidname place}}{\*\xmlopen\xmlns2{\factoidname country-region}}
Australia{\*\xmlclose}{\*\xmlclose}, all of which presumably lodge tax returns. In comparison, Peter Costello estimat
ed that the removal of tax on superannuation payments to over 60 year olds would mean that 150,000 people would no longer need to lodge a personal tax return.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 3.\tab}Those investing retirement money would not need to spend time trying to manage tax issues apart f
rom the attraction of fully franked dividends from Australian companies.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 4.\tab}
Consistency of taxation of retirement savings with the progressive income tax system: There is an income tax system for individuals and it is better to let that apply first to amounts
before they enter the tax-preferred savings environment, rather than having a partial flat tax system applying to the amount saved for retirement. If an incentive for retirement saving is required then it can be applied transparently via direct subsidy.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 5.\tab}B
ias against taking of lump sums: Because of progressive income tax and the absence of tax in funds, the proposed system encourages taking payments as pensions over a long period. That is, it generally discourages withdrawal of large lump sums which can be
dissipated by individuals, resulting in the need for welfare in retirement. If this does happen in some cases, it will at least be preceded by some tax being taken out first. Taxpayers provide insurance for the risk of individual retirees making financial
l
y incompetent decisions and losing all or most of their retirement savings and the proposed system reduces the risks for taxpayers. (It could be argued that allowing gearing in Life Savings Funds still allows this to happen. However, if individuals suffer
large losses due to gearing then it seems that it would be less likely in retirement and more importantly it would not result in the concurrent loss of the large initial tax subsidies inherent in the existing system.)
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 6.\tab}The Life Savings System should provide
better inter-generational equity. It involves no loss of revenue from income tax related to work by individuals in contrast to the current system. It does involve a tax subsidy related to investment earnings and to income taken in retirement (and from po
ssible government contributions), but the tax subsidies will be of most benefit to lower income earners who are more likely to need help to avoid reliance on the aged pension.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 7.\tab}Flexibility for individuals and government: It is easy for governments to adjust
the proposed Life Savings System because the existing income tax system is applied first. (That is, it is effectively a 'take tax first and consider subsidies later' system. The current system is so generous that the only sensible way to reform it is to i
n
crease tax, which is very difficult for governments on a piecemeal basis and without hurting low income earners.) For example under the LSS, if a government wanted to direct proposed tax cuts into savings then it could give the tax cut but concurrently ra
ise the compulsory contribution level. It could also boost saving for retirement by expanding government contributions, for example in a year when tax revenues are very high but there is a risk of inflation.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 8.\tab}Franking credits will still be very attractive to
a substantial part of the investors in the Australian stockmarket. This should continue to provide a disincentive for listed Australian companies to push tax avoidance to the limits.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 9.\tab}A major reform like the LSS gives the opportunity to include changes tha
t are not related to tax and structure. For example, the adoption of default additional contributions on top of the compulsory 7%, such as an extra 1 to 3% or default directions of after tax pay increases into LSFs.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par Possible problems/issues/negatives with the above system are:
\par
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 1.\tab}}\pard \ltrpar\qj \fi-360\li720\ri0\widctlpar
\jclisttab\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls8\adjustright\rin0\lin720\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
The absence of tax on investment returns will lead to faster growth of assets than with a nominal 15% tax on returns. Over decades there will be a very substantial amount held in LSFs. These assets will not generate any tax revenue
for the Australian Government compared to the nominal 15% tax that applies to superannuation now. However, offsetting this is the removal of tax deductions on contributions, which should result in a substantial net gain in tax revenue and lower contributi
o
ns. It should also be remembered that under the current system when superannuation funds pass into pension phase they become tax free so this system already partially exists. Over time, the Life Savings System should result in increased retirement savings
for lower income earners who, under the current superannuation system, are more likely to be dependent on aged pensions in retirement. (This will arise from higher net investment earnings in a tax free environment and rising compulsory contributions over
t
ime.) Reduced need for pensions will reduce demands on future Federal Budgets as the population ages. (It is beyond the scope of this document to model the relative revenue outcomes, which will change depending on the balance between workers and retirees,
etc.)
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 2.\tab}
The proposed Life Savings System will result in substantially less tax benefits for some higher income earners while increasing advantages for lower income earners. It is therefore likely to be subject to attacks by vested interests and politicians.
This may impinge on the attraction of saving for retirement by the general public. This proposal also allows withdrawals of some existing superannuation holdings. It is possible that the combination of these factors may result in an initial contraction of
total savings for retirement. However, such withdrawals are more likely from more wealthy members (which is unlikely to add much to the burden on taxpayers for age pensions). The removal of the need for employer agreement to obtain the best tax outcomes,
tax free investment returns plus the expansion of compulsory contributions should be able to improve growth of retirement savings, particularly for those who most need it.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 3.\tab}In the future some (more wealthy) Life Savings Account holders will be subject to tax
on withdrawals after the age of 60 although they may not necessarily be disadvantaged relative to the current system of tax free withdrawals from superannuation after that age. Some may have to lodge tax returns although the tax free threshold plus the i
n
dexation of the tax free component in the new funds should avoid this for most people at some stage of their retirement. For an individual with little income and capital gains apart from withdrawals from Life Savings Accounts, it should be possible for th
e
PAYG deductions to remove the need for lodgment of a tax return in most cases. When all the taxable component is withdrawn, payments from the tax free component will not require lodgment of a tax return or withholding of tax. (There will probably be a ta
xable component generated each year from investment returns but this should not create the need for lodgment of tax returns by most people as they age.)
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 4.\tab}
With compulsory contributions being a fixed percentage of after-tax remuneration, the proportion that th
is represents of pre-tax remuneration declines with higher incomes because of the progressive tax system. That is, the current system results in higher compulsory contributions by higher income earners than the Life Savings System. Given that potential fu
t
ure problems for taxpayers in funding age pensions is more likely to arise in relation to lower income earners, this may not be much of a problem and can be addressed by raising the compulsory percentage over time. There is also the attraction that non-co
mpulsory contributions of any amount can be made at any time.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 5.\tab}
There may be a complication for administrators of Life Savings Funds in relation to some members who withdraw taxable components and have accounts with multiple funds. For example, a member may h
ave an account with Fund A that is 100% tax free and an account with Fund B that has a substantial taxable component. If the member applies to withdraw from Fund A then one way to enforce the rule of taxable components first is for its administrators to k
n
ow of the Fund B holding. This may require members to comply with rules on withdrawals, declarations from members, communication of data between funds, encouraging consolidation of accounts and/or dealing with the tax issues retrospectively. Another metho
d
in theory would be for all funds to electronically report tax free and taxable components with tax file numbers to the ATO after each 30 June with the ATO acting as a reference point to check before withdrawals. This may present substantial operational c
h
allenges for the ATO. In practice it will be unusual for account holders to have only a tax free component with one fund and no taxable component with another. This is a similar problem to taxpayers who work for multiple employers and can be partly addres
sed as the employment situation is \endash
by declarations by account holders as to whether their account in a Life Savings Fund is their sole account and therefore to be taxed as such, etc. (Note that there is a similar complication with the existing system in r
elation to tax on contributions that exceed the concessional cap, because this cap applies to accounts held in multiple funds. This requires calculation of total contributions across multiple funds.)
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 6.\tab}The fund management industry may be alarmed that the Lif
e Savings System will result in reduced inflows. However, this may not be an issue in the long term as tax free growth will eventually result in higher amounts from compulsory contributions in most accounts. (Sample calculations suggest this.) Like the cu
r
rent superannuation system, the LSS will be the most tax effective way to save so it should attract substantial funds. It seems unlikely that the changes will cause strong outflows, except from the small minority who will be exposed to the excess contribu
tions and assets taxes. Also, the LSS discourages withdrawal of lump sums and this should maintain a high level of funds under management in the long term. Finally, the government should raise the compulsory percentage over time.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 7.\tab}The proposed system will re
quire valuations of all assets in funds at least at 30 June of each year for reporting to the ATO and members. Those with very substantial holdings will assess their possible liability to the excess assets test. This may increase the attractiveness of exo
tic investments that are difficult to value so the ATO will have to be vigilant in monitoring such investments and funds to ensure there is no evasion of this tax.
\par {\listtext\pard\plain\ltrpar \rtlch\fcs1 \af0\afs20 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\langfenp255\insrsid13398692 \hich\af36\dbch\af0\loch\f36 8.\tab}Accounts should grow faster over time in the Life Savings System than in the current superann
uation system due to a zero tax environment, but Life Savings Accounts can be considered to have contingent tax liabilities for those over 60 years of age. A criticism may be that this will give retirees a false sense of the worth of their retirement savi
n
gs under the LSS compared to the current superannuation system. There is some validity in this argument but for most people who do not have multi-million dollar holdings and take moderate withdrawals over the decades of their retirement, the tax liability
should be low.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692\charrsid3806069
\par {\listtext\tab}}\pard \ltrpar\qj \li0\ri0\widctlpar\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\adjustright\rin0\lin0\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid13398692\charrsid3806069
Achieving Adequate Retirement Savings
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692\charrsid3806069
\par Much has been written around claims that many Australians will have insufficient savings for a reasonable retirement. Since those with such problems will be primarily low income earners, the Life Savin
gs System addresses this issue by removing the bias of the current tax incentives to higher income earners to allow greater assistance to those who are likely to otherwise accumulate relatively low levels of savings. In effect, the LSS provides a framewor
k
for achieving better retirement savings for low and middle income earners. Based on this system, the best way to avoid inadequate savings problems is for governments to raise the level of compulsory contributions as they continue the trend of tax cuts, s
o low income earners' after tax situations are not significantly negatively impacted. As the LSS should result in substantial savings in tax revenue, particularly in the short term, achieving this should not be difficult.
\par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par {\*\bkmkstart _Toc223671791}{\listtext\tab}}\pard\plain \ltrpar\s1\ql \li0\ri0\keepn\widctlpar\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs30\ul\lang3081\langfe255\kerning1\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Transition to the New System{\*\bkmkend _Toc223671791}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0
\ltrch\fcs0 \insrsid13398692
\par Tran
sitioning to new rules is an area that has substantially complicated previous changes to superannuation and so must be handled carefully and with the same commitment to attempting to avoid disadvantaging existing beneficiaries. Thus there appears to be no
alternative in transitioning to the proposed system other than to deem all existing superannuation holdings to be tax free components. This could be done at the date of announcement of the change, although the change to the new system should be on a 1 Jul
y date following the announcement. This may require that current arrangements involving concessional and non-concessional contributions continue until the end of the financial year of the announcement.
\par
\par In summary, the government should announce that the Life Savings System would commence on a 1 July date (provided that the current fund administrators etc are given at least 12 months to prepare \endash
and possibly up to three years), declare that all holdings at that date will form part of the tax free component
at that date and allow the existing rules of contribution to apply until either that 1 July or say 3 months into the future. Future earnings would be taxable, except for the indexation of the tax free components.
\par
\par {\*\bkmkstart _Toc223671792}{\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025
\ltrch\fcs0 \b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Assets Initially Exceeding Asset Thresholds{\*\bkmkend _Toc223671792}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0
\ltrch\fcs0 \insrsid13398692
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\tx720\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 There would }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\insrsid13398692 not}{
\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
need to be an exemption from the assets included in the calculation of the excess assets tax each year for the total of beneficiaries' holdings at 30 June prior to the financial year of implementation of the proposed system (ie \'93grandfathering\'94
) because the LSS includes a provision for total holdings in superannuation that exceed $2 million to be withdrawn, including if the account holder is under preservation age. Normal tax applies on such withdrawals but at commencement, all amounts i
n existing superannuation accounts would be declared to be part of the tax free component. Thus a person with more than $3 million in superannuation at the date of commencement of the LSS could immediately withdraw the amount exceeding $2 million free of
tax and thereby avoid the excess contributions and assets taxes, if they wished.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13398692 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par {\*\bkmkstart _Toc223671793}{\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025
\ltrch\fcs0 \b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Recipients of Superannuation Pensions{\*\bkmkend _Toc223671793}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0
\ltrch\fcs0 \insrsid13398692
\par For those people receiving a superannuation pension, all of their pension accounts would be declared to be tax free components at the 1
July date of commencement of the proposed system. Life Saving Funds are not subject to tax so the tax status of pension funds would not change. For most superannuation pensioners, there would probably be no change. Those with pension accounts of millions
o
f dollars may be subject to excess assets tax and/or generate sufficient taxable components over time to be subject to tax on withdrawals. As described in the previous section, they could withdraw any amounts exceeding $2 million and avoid these taxes in
the Life Savings Fund. (Note that if done early enough in the life of the holding under the LSS, such larger withdrawals would not be subject to tax on withdrawal because there would be insufficient time to generate a taxable component.)
\par
\par {\*\bkmkstart _Toc223671794}{\listtext\tab}}\pard\plain \ltrpar\s1\ql \li0\ri0\keepn\widctlpar\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0
\b\f36\fs30\ul\lang3081\langfe255\kerning1\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Alternatives, Comments and Tax Minimisation{\*\bkmkend _Toc223671794}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0
\ltrch\fcs0 \insrsid13398692
\par {\*\bkmkstart _Toc223671795}{\listtext\tab}}\pard\plain \ltrpar\s2\ql \li0\ri0\keepn\widctlpar\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl1\outlinelevel1\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025
\ltrch\fcs0 \b\f36\fs28\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Alternatives{\*\bkmkend _Toc223671795}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0
\ltrch\fcs0 \insrsid13398692
\par {\*\bkmkstart _Toc223671796}{\listtext\tab}}\pard\plain \ltrpar\s3\qj \li0\ri0\keepn\widctlpar\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl2\outlinelevel2\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025
\ltrch\fcs0 \b\f36\fs24\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Allowing Full Deductibility of Contributions{\*\bkmkend _Toc223671796}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0
\ltrch\fcs0 \insrsid13398692
\par An alternative reform is to allow full deductibility of contributions by individuals and companies, abolish all tax within funds and only have tax on withdrawals. The at
traction of this approach is that account balances can grow very rapidly and if there are no after tax contributions then they would contain only 1 component consisting of untaxed contributions and untaxed investment returns. (It is unlikely that post tax
contributions would be prohibited, in which case there would be 2 components, just as in the LSS.)
\par
\par The first problem with this system is that it requires continuation of restrictions on contributions and other complex rules or the loss of government reven
ue becomes too great. (The contribution limits would probably have to be lower than the current limits to protect government revenue.) Many Australians may not be able to take full advantage of the tax deductions because of unavailability of sufficient ea
r
nings for each year or the need to save for a home purchase but are restricted later in life by the limits. Second, it bypasses the progressive tax system and provides greater benefits to those who can afford to contribute more, up to the limit on contrib
utions. Unless personal deductible contributions were allowed (creating even more loss of tax revenue), this system would continue the need for employer co-operation.
\par
\par This system would also require more people to declare and pay tax on their superannuation
withdrawals and many people would probably have to file tax returns and pay tax into their 80s and 90s, although deduction at source may remove the need for tax returns.
\par
\par Some of the problems could be addressed by allowing unlimited contributions but imposing a low level excess assets tax and/or contributions tax, starting at say $2 million.
\par
\par Overall, this is a much less attractive option.
\par
\par {\*\bkmkstart _Toc223671797}{\listtext\tab}}\pard\plain \ltrpar\s3\qj \li0\ri0\keepn\widctlpar\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl2\outlinelevel2\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025
\ltrch\fcs0 \b\f36\fs24\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 An Alternative Treatment of Death Benefits{\*\bkmkend _Toc223671797}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0
\ltrch\fcs0 \insrsid13398692
\par An alternative to the death benefits rules proposed above is a requiremen
t to pay out a deceased member's balance immediately for non-dependants and over a reasonable period for dependants. Prior to 30 June 2004, the law only defined dependants as a spouse, child and any other person financially dependent on the fund member. T
his was extended to those in an \'93}{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \cs35\insrsid13398692\charrsid16531431 interdependency relationship}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 \'94
. Defining this inevitably results in complication and imprecision. However, if it is desired to continue with this in the LSS then the definitions of dependants would continue to apply except th
at any person under the age of 18 (not necessarily a relative) who is nominated by the deceased would be included with the dependant provisions. A dependant would be paid the deceased's benefit over their lifetime except that a child under 18 would only b
e paid from the account until reaching 18 years of age. Such payments would be treated the same as other withdrawals \endash
taxable components required to be taken first and added to the beneficiary's taxable income (at adult rates), followed by tax free compone
nts. Account holders (first preference) or beneficiaries could stipulate any rate of payment they wished and the latter could vary it over the period of payments. Any amount remaining at the age of 18 for a child would have to be paid to that child prior
to his or her 18}{\rtlch\fcs1 \af0 \ltrch\fcs0 \super\insrsid13398692 th}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
birthday. Beneficiaries who are adult non-dependants at the time of the member's death would be required to be paid the full benefit within 12 months of the member's death and taxable components would be added to their taxable income.
\par
\par In summary, the difference is that dependants are given much more time to receive the deceased member's holdings. This may mean that a non-dependant may have to pay more tax.
\par
\par {\*\bkmkstart _Toc223671798}{\listtext\tab}}\pard\plain \ltrpar\s3\qj \li0\ri0\keepn\widctlpar\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\ilvl2\outlinelevel2\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025
\ltrch\fcs0 \b\f36\fs24\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Abolishing Inhouse Asset Restrictions{\*\bkmkend _Toc223671798}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0
\ltrch\fcs0 \insrsid13398692
\par An alternative to the inhouse asset restric
tions that would continue under the LSS is to reduce the level at which the excess assets tax applies and remove all restrictions on investment including exposure to inhouse assets. The latter would allow Private Life Savings Funds (PLSFs) to invest in pr
i
vate companies owned by members. (The lower excess asset tax threshold could be restricted to PLSFs.) A problem then arising is that an owner of a private company could sell it to their PLSF, limit their remuneration to a low level and effectively direct
a
large part of the company's after tax profits into the PLSF via fully franked dividends. The result is complete avoidance of tax on the amount going into the PLSF after refund of franking credits. Everything is eventually potentially taxable under the LS
S
, but it would provide a method for deferring tax for decades and create asset valuation problems for application of the excess assets test. An attraction is that it removes another layer of complexity and allows a small business owner to maintain his or
h
er retirement savings in the tax effective environment but still invest in his/her business. It also provides an alternative to the current complex small business CGT concessions and is probably not as generous. Such a change would be likely to encourage
h
igher levels of incorporation of small businesses and ownership of them by PLSFs. One way to address the tax deferral problem would be to lower the threshold for the excess assets tax in LSFs (to say $2 million). Removing inhouse asset restrictions would
create a substantial tax deferral opportunity for those with private companies, up to the point where they were affected by the excess assets tax.
\par
\par However, the advantages that this approach gives of removing the disincentive with superannuation of locking
savings away for decades may make it worth consideration as a replacement for the current small business tax concessions. Removing all inhouse asset restrictions still means savings are locked into the LSS but they can be effectively utilised in any perso
n\rquote s business.
\par
\par {\*\bkmkstart _Toc223671799}{\listtext\tab}}\pard\plain \ltrpar\s1\ql \li0\ri0\keepn\widctlpar\jclisttab\tx0\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\ls1\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025
\ltrch\fcs0 \b\f36\fs30\ul\lang3081\langfe255\kerning1\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692 Conclusion{\*\bkmkend _Toc223671799}
\par }\pard\plain \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13398692 \rtlch\fcs1 \af0\afs20\alang1025 \ltrch\fcs0 \f36\fs22\lang3081\langfe255\cgrid\langnp3081\langfenp255 {\rtlch\fcs1 \af0
\ltrch\fcs0 \insrsid13398692
\par This document argues for removal of the current tax subsidies for saving via superannuation and advocates greater reliance on compulsory saving in a less regressive and administratively complex framework. Governments then have the
option of either utilising those tax subsidies to transparently contribute to savings, lower income taxes or both. In essence this document is a proposal for a start on a more rational tax system that will be fairer, easier to understand and that address
es rather than exacerbates the problems associated with an aging population.
\par }\pard \ltrpar\qj \li0\ri0\widctlpar\wrapdefault\hyphpar0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid13398692
\par
\par }}